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Last Updated: Monday, 27 June, 2005, 15:58 GMT 16:58 UK
India 'could miss growth target'
Indian farmer walking across dried out lake
Indian farmers must make the most of the monsoons, the PM said
India's economy will fail to hit the target of growing 8% a year called for in its five-year plan, prime minister Manmohan Singh has warned.

Mr Singh said an agricultural slowdown, as well as a lack of infrastructure and high oil prices had hit growth.

He voiced particular fears for agriculture, where growth has slowed from 3.2% in 1980-96 to just 2.1%

The prime minister made the comments during a ministers' meeting in Delhi to review progress of the plan.

During the talks, he added farming's performance had weakened further and "may not exceed 1.5%" in the early years of the plan.

Monsoon benefits

Mr Singh added that agriculture's problems were partly the result of an ongoing difficulty in coping with changes in the annual June-September monsoon season, and partly down to a lack of investment.

He's making the political establishment aware this is how much below potential we are and he's making an appeal to coalition partners to help us get our act together
Abheek Barua, analyst

Low funds mean farmers are unable to irrigate their fields to make the most of the rains, leaving farm output vulnerable to shifting weather patterns - the worst monsoon in 15 years dragged economic growth down to 4% in the year to March 2003.

Adopting improved post-harvest management and better production practices could make a difference, he said.

The sector is key to the country's economy, and while its reliance on agriculture has dwindled in recent years leaving its share of the economy at 20%, farming still supports two thirds of India's population.

Infrastructure was another key bottleneck that must be tackled if the country's economy was to grow, the prime minister said.

While industry is more competitive and open, expansion of power and key transport links could catapult it forward to attain 8% growth for each year of the government's plan.

Missed targets

Instead, he currently expects growth of 7% to 8% this year and next, but said he feared such expansion could not be sustained in present conditions.

According to estimates 8% is the growth rate needed for a sustainable reduction in Indian poverty.

Analysts said it was no surprise the country would miss its target, but added the prime minister's comments were aimed at igniting action among the coalition government's political allies.

Recently, communist allies have blocked a number key measures such as the sale of stakes in government run companies.

"He's making the political establishment aware this is how much below potential we are and he's making an appeal to coalition partners to help us get our act together," ABM Amro's chief India economist Abheek Barua told Reuters.


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